Owners Connect Patronage Refunds to Community

From September-October 2015

Onion River Co-op, City Market
Burlington, VT

Year founded: 1973
Member investment: $200 stock purchase
Number of members:  11,083
Retail square feet:  12,000
Number of employees:  255


City Market's 2014 Co-op Seedling Grant Recipients

River Valley Market
Northampton, Massachusetts

Year founded: 2008
Member investment: $150 stock purchase
Number of members:  4,760
Retail square feet:  17,000
Number of employees:  105


For years, co-ops have wondered what to do with uncashed patronage refund checks.  Often they were reabsorbed into the operation and declared as taxable income.  Depending on the co-op’s situation, that was not always the best scenario.  And then…eureka!  What if that money’s impact could be multiplied and put to good use in the community?  More and more co-ops are discovering the benefits of including their owners in a decision about what to do with their patronage funds.  They’ve learned that the win-win-win factor is off the charts.  Members like seeing the tangible results of their largess.  Community organizations get much-needed resources, and new people become connected to the co-op.

Consider Onion River Co-op, City Market in Burlington, Vermont.  The board changed its bylaws in order to give the co-op more flexibility to use patronage funds for funding a grant program.  In 2011, they launched the Co-op Patronage Seedling Grants, wherein a co-op committee that included co-op members and staff selected five organizations seeking money to launch new initiatives supporting the local food system.  Members were sent checks for their patronage refunds (the law in Vermont) with an accompanying letter stating it could be cashed, put toward unpaid equity, donated to Hunger Free Vermont or used to fund the Seedling Grant program.  The response to all of the above was overwhelmingly positive.  Any unclaimed refunds after 90 days went to the grant program.

“Our members are amazing.  They were super generous regarding this call to action from the co-op,” said Allison Weinhagen, Onion River’s director of community engagement, noting that their generosity resulted in $60,000 being donated to the Seedling Grant’s five recipients, and $7,000 to Hunger Free Vermont last year.  “People want to do more for the co-op and their community, and this is a very tangible way for them to do this,” she said.

As part of the grant program the co-op hosted an event with the recipients and the media.  “We got this incredible outpouring of passionate stories,” Weinhagen said, and people were thrilled to have the opportunity meet each other.  In the past, she noted, the co-op gave away lots of money, and the stories went untold and the connections unrealized, for everyone, including the co-op’s members.

Weinhagen said that she has continually sought ways to invite more people into the co-op sphere, and help those who are there along the continuum of involvement.  She said she’s been greatly influenced by Marilyn Scholl’s Pyramid of Participation, wherein use (shopping) comprises the base of owner engagement, with the pinnacle being service.  “I’m always reminded that shopping is engagement, and that’s enough for some.  But there are other people who are ready for more or want to do more through the co-op.  Our patronage refund donation program is a tangible way for them to do that,” Weinhagen said.

At River Valley Market in Northampton, Mass., an eight-year-old startup, they found themselves in the unexpected position of having a surplus earlier than expected.  The board decided that any unclaimed patronage refunds would be donated to two co-op development organizations, Twin Pines’ Co-op Community Fund, and the Food Co-op Initiative, an organization that offers free services and resources to startup food co-ops.

Like the members at Onion River, River Valley Market’s owners are thrilled to support fellow startup co-ops.  “Members like it a lot,” said Rochelle Prunty, River Valley Market’s general manager of their rebate program.  “It’s a good opportunity to highlight those two organizations and the principle of cooperation among co-ops,” she said.  “We got so much help from them when we were starting up.  It’s our way of paying it forward.”

This year, the co-op was able to give $15,000 each to both organizations.  Stuart Reid, executive director of Food Co-op Initiative said patronage refunds monies being used this way is very compelling.  “I can’t think of a better way for co-ops to support co-op development.  It’s taking the idea to members one-to-one.  It’s really powerful.”

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